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Bank Of Hawaii Corporation First Quarter 2012 Financial Results

Conference Call Information

The Company will review its first quarter 2012 financial results today at 8:00 a.m. Hawaii Time. The conference call will be accessible via teleconference and via the Investor Relations link of Bank of Hawaii Corporation’s web site, www.boh.com. Conference call participants located in the United States should dial 800-599-9816. International participants should dial 617-847-8705. Use the pass code “Bank of Hawaii” to access the call. A replay will be available for one week beginning Monday, April 23, 2012 by calling 888-286-8010 in the United States or 617-801-6888 internationally and entering the pass code number 76013334 when prompted. A replay will also be available via the Investor Relations link on the Company’s web site.

Forward-Looking Statements

This news release, and other statements made by the Company in connection with it may contain “forward-looking statements”, such as forecasts of our financial results and condition, expectations for our operations and business prospects, and our assumptions used in those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results might differ significantly from our forecasts and expectations because of a variety of factors. More information about these factors is contained in Bank of Hawaii Corporation's Annual Report on Form 10-K for the year ended December 31, 2011, which was filed with the U.S. Securities and Exchange Commission. We have not committed to update forward-looking statements to reflect later events or circumstances.

Bank of Hawaii Corporation is a regional financial services company serving businesses, consumers and governments in Hawaii, American Samoa and the West Pacific. The Company’s principal subsidiary, Bank of Hawaii, was founded in 1897 and is the largest independent financial institution in Hawaii. For more information about Bank of Hawaii Corporation, see the Company’s web site, www.boh.com .

Bank of Hawaii Corporation and Subsidiaries  
Financial Highlights     Table 1a
  Three Months Ended
March 31,   December 31, March 31,
(dollars in thousands, except per share amounts)   2012     2011     2011

For the Period:

Operating Results
Net Interest Income $ 97,948 $ 96,246 $ 99,697
Provision for Credit Losses 351 2,219 4,691
Total Noninterest Income 48,082 43,407 53,922
Total Noninterest Expense 85,207 84,382 86,082
Net Income 43,810 39,229 42,360
Basic Earnings Per Share 0.96 0.85 0.89
Diluted Earnings Per Share 0.95 0.85 0.88
Dividends Declared Per Share 0.45 0.45 0.45
 
Performance Ratios
Return on Average Assets 1.29 % 1.17 % 1.32 %
Return on Average Shareholders' Equity 17.26 15.23 16.86
Efficiency Ratio 1 58.35 60.42 56.04
Net Interest Margin 2 3.06 3.04 3.24
Dividend Payout Ratio 3 46.88 52.94 50.56
Average Shareholders' Equity to Average Assets 7.46 7.65 7.86
 
Average Balances
Average Loans and Leases $ 5,563,358 $ 5,420,352 $ 5,311,781
Average Assets 13,681,229 13,357,646 12,965,633
Average Deposits 10,430,215 10,160,392 9,873,727
Average Shareholders' Equity 1,020,668 1,022,012 1,018,788
 
Market Price Per Share of Common Stock
Closing $ 48.35 $ 44.49 $ 47.82
High 48.75 45.13 49.23
Low 44.08 34.50 44.32
 
March 31, December 31, March 31,
      2012       2011       2011

As of Period End:

Balance Sheet Totals
Loans and Leases $ 5,598,932 $ 5,538,304 $ 5,326,929
Total Assets 13,759,409 13,846,391 12,962,304
Total Deposits 10,621,170 10,592,623 9,912,391
Long-Term Debt 30,687 30,696 32,643
Total Shareholders' Equity 995,897 1,002,667 996,225
 
Asset Quality
Allowance for Loan and Lease Losses $ 135,606 $ 138,606 $ 147,358
Non-Performing Assets 41,406 40,790 34,592
 
Financial Ratios
Allowance to Loans and Leases Outstanding 2.42 % 2.50 % 2.77 %
Tier 1 Capital Ratio 16.50 16.68 18.41
Total Capital Ratio 17.76 17.95 19.68
Tier 1 Leverage Ratio 6.57 6.73 7.16
Total Shareholders' Equity to Total Assets 7.24 7.24 7.69
Tangible Common Equity to Tangible Assets 4 7.02 7.03 7.46
Tangible Common Equity to Risk-Weighted Assets 4 17.62 17.93 19.04
 
Non-Financial Data
Full-Time Equivalent Employees 2,318 2,370 2,381
Branches and Offices 81 81 82
ATMs 498 506 506
 
 
1 Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and total noninterest income).
2 Net interest margin is defined as net interest income, on a taxable equivalent basis, as a percentage of average earning assets.
3 Dividend payout ratio is defined as dividends declared per share divided by basic earnings per share.

4 Tangible common equity, a non-GAAP financial measure, is defined by the Company as shareholders' equity minus goodwill and intangible assets. Intangible assets are included as a component of other assets in the Consolidated Statements of Condition.

 
 
Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures Table 1b  
  March 31,   December 31, March 31,
(dollars in thousands)     2012       2011       2011  
 
Total Shareholders' Equity $ 995,897 $ 1,002,667 $ 996,225
Less: Goodwill 31,517 31,517 31,517
Intangible Assets     71       83       131  
Tangible Common Equity   $ 964,309     $ 971,067     $ 964,577  
 
Total Assets $ 13,759,409 $ 13,846,391 $ 12,962,304
Less: Goodwill 31,517 31,517 31,517
Intangible Assets     71       83       131  
Tangible Assets   $ 13,727,821     $ 13,814,791     $ 12,930,656  
 

Risk-Weighted Assets, determined in accordance with prescribed regulatory requirements

$ 5,473,661 $ 5,414,481 $ 5,065,817
 
Total Shareholders' Equity to Total Assets 7.24 % 7.24 % 7.69 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 7.02 % 7.03 % 7.46 %
 
Tier 1 Capital Ratio 16.50 % 16.68 % 18.41 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 17.62 % 17.93 % 19.04 %
 
 
Bank of Hawaii Corporation and Subsidiaries  
Net Significant Income (Expense) Items   Table 2
  Three Months Ended
(dollars in thousands)  

March 31, 2012

 

December 31, 2011

 

March 31, 2011

Investment Securities Gains, Net $ -   $ - $ 6,084
Gains (Losses) on Disposal of Leased Equipment 2,473 - -
Decrease in Allowance for Loan and Lease Losses 3,000 4,804 -
PC Refresh     (1,163 )     -     -
Significant Income (Expense) Items Before the Provision (Benefit) for Income Taxes     4,310       4,804     6,084
Income Taxes Impact Related to Lease Transactions (2,733 ) - -
Income Tax Impact     293       1,681     2,129
Net Significant Income (Expense) Items   $ 6,750     $ 3,123   $ 3,955
 
 
Bank of Hawaii Corporation and Subsidiaries      
Consolidated Statements of Income           Table 3
Three Months Ended
(dollars in thousands, except per share amounts)  

March 31, 2012

 

December 31, 2011

 

March 31, 2011

Interest Income
Interest and Fees on Loans and Leases $ 64,691 $ 64,760 $ 66,593
Income on Investment Securities
Available-for-Sale 17,713 19,107 37,669
Held-to-Maturity 26,413 23,608 7,633
Deposits 2 2 (2 )
Funds Sold 129 120 251
Other     280       280     279  
Total Interest Income     109,228       107,877     112,423  
Interest Expense
Deposits 3,473 3,736 5,232
Securities Sold Under Agreements to Repurchase 7,304 7,392 7,041
Funds Purchased 5 5 6
Long-Term Debt     498       498     447  
Total Interest Expense     11,280       11,631     12,726  
Net Interest Income 97,948 96,246 99,697
Provision for Credit Losses     351       2,219     4,691  
Net Interest Income After Provision for Credit Losses     97,597       94,027     95,006  
Noninterest Income
Trust and Asset Management 10,918 11,025 11,806
Mortgage Banking 5,050 3,401 3,122
Service Charges on Deposit Accounts 9,591 9,606 9,932
Fees, Exchange, and Other Service Charges 12,399 12,401 14,945
Investment Securities Gains (Losses), Net (90 ) 282 6,084
Insurance 2,278 2,312 2,771
Other     7,936       4,380     5,262  
Total Noninterest Income     48,082       43,407     53,922  
Noninterest Expense
Salaries and Benefits 47,024 44,927 46,782
Net Occupancy 10,516 11,253 10,327
Net Equipment 5,826 4,748 4,698
Professional Fees 2,132 1,926 2,158
FDIC Insurance 2,071 2,027 3,244
Other     17,638       19,501     18,873  
Total Noninterest Expense     85,207       84,382     86,082  
Income Before Provision for Income Taxes 60,472 53,052 62,846
Provision for Income Taxes     16,662       13,823     20,486  
Net Income   $ 43,810     $ 39,229   $ 42,360  
Basic Earnings Per Share $ 0.96 $ 0.85 $ 0.89
Diluted Earnings Per Share $ 0.95 $ 0.85 $ 0.88
Dividends Declared Per Share $ 0.45 $ 0.45 $ 0.45
Basic Weighted Average Shares 45,709,936 46,195,147 47,851,612
Diluted Weighted Average Shares     45,875,238       46,324,734     48,074,656  
 
 
Bank of Hawaii Corporation and Subsidiaries  
Consolidated Statements of Comprehensive Income   Table 4
    Three Months Ended
(dollars in thousands)  

March 31, 2012

 

December 31, 2011

 

March 31, 2011

Net Income $ 43,810   $ 39,229 $ 42,360
Other Comprehensive Income, Net of Tax:
Net Unrealized Losses on Investment Securities (6,454 ) (1,965 ) (19,500 )
Defined Benefit Plans     153       (9,526 )     471  
Other Comprehensive Income     (6,301 )     (11,491 )     (19,029 )
Comprehensive Income   $ 37,509     $ 27,738     $ 23,331  
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition   Table 5
(dollars in thousands)  

March 31, 2012

 

December 31, 2011

 

March 31, 2011

Assets      
Interest-Bearing Deposits $ 3,333 $ 3,036 $ 5,394
Funds Sold 213,458 512,384 419,379
Investment Securities
Available-for-Sale 3,469,260 3,451,885 4,045,096
Held-to-Maturity (Fair Value of $3,877,269; $3,754,206; and $2,437,803) 3,779,272 3,657,796 2,426,710
Loans Held for Sale 10,655 18,957 16,160
Loans and Leases 5,598,932 5,538,304 5,326,929
Allowance for Loan and Lease Losses     (135,606 )     (138,606 )     (147,358 )
Net Loans and Leases     5,463,326       5,399,698       5,179,571  
Total Earning Assets     12,939,304       13,043,756       12,092,310  
Cash and Noninterest-Bearing Deposits 154,100 154,489 223,068
Premises and Equipment 106,543 103,550 106,729
Customers' Acceptances 117 476 779
Accrued Interest Receivable 48,032 43,510 41,309
Foreclosed Real Estate 3,530 3,042 2,793
Mortgage Servicing Rights 23,915 24,279 25,919
Goodwill 31,517 31,517 31,517
Other Assets     452,351       441,772       437,880  
Total Assets   $ 13,759,409     $ 13,846,391     $ 12,962,304  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 2,964,372 $ 2,850,923 $ 2,568,942
Interest-Bearing Demand 1,964,487 2,005,983 1,811,705
Savings 4,440,674 4,398,638 4,515,921
Time     1,251,637       1,337,079       1,015,823  
Total Deposits     10,621,170       10,592,623       9,912,391  
Funds Purchased 11,024 10,791 9,478
Short-Term Borrowings - - 6,900
Securities Sold Under Agreements to Repurchase 1,825,646 1,925,998 1,745,083
Long-Term Debt 30,687 30,696 32,643
Banker's Acceptances 117 476 779
Retirement Benefits Payable 41,862 46,949 30,707
Accrued Interest Payable 6,318 5,330 6,605
Taxes Payable and Deferred Taxes 104,259 95,840 124,774
Other Liabilities     122,429       135,021       96,719  
Total Liabilities     12,763,512       12,843,724       11,966,079  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: March 31, 2012 - 57,290,145 / 45,605,881; December 31, 2011 - 57,134,470 / 45,947,116; and March 31, 2011 - 57,120,240 / 47,760,878)

571 571 570
Capital Surplus 509,860 507,558 502,029
Accumulated Other Comprehensive Income 28,962 35,263 7,936
Retained Earnings 1,024,736 1,003,938 951,817

Treasury Stock, at Cost (Shares: March 31, 2012 - 11,684,264; December 31, 2011 - 11,187,354; and March 31, 2011 - 9,359,362)

    (568,232 )     (544,663 )     (466,127 )
Total Shareholders' Equity     995,897       1,002,667       996,225  
Total Liabilities and Shareholders' Equity   $ 13,759,409     $ 13,846,391     $ 12,962,304  
 
 
Bank of Hawaii Corporation and Subsidiaries  
Consolidated Statements of Shareholders' Equity   Table 6
(dollars in thousands)  

Common Shares Outstanding

 

Common Stock

 

Capital Surplus

 

Accum. Other Compre- hensive Income

 

Retained Earnings

 

Treasury Stock

 

Total

Balance as of December 31, 2011   45,947,116   $ 571   $ 507,558   $ 35,263   $ 1,003,938   $ (544,663 ) $ 1,002,667
Net Income - - - - 43,810 - 43,810
Other Comprehensive Income - - - (6,301 ) - - (6,301 )
Share-Based Compensation - - 1,831 - - - 1,831
Common Stock Issued under Purchase and Equity

Compensation Plans and Related Tax Benefits

326,174 - 471 - (2,317 ) 7,735 5,889
Common Stock Repurchased (667,409 ) - - - - (31,304 ) (31,304 )
Cash Dividends Paid ($0.45 per share)   -       -     -     -       (20,695 )     -       (20,695 )
Balance as of March 31, 2012   45,605,881     $ 571   $ 509,860   $ 28,962     $ 1,024,736     $ (568,232 )   $ 995,897  
 
Balance as of December 31, 2010 48,097,672 $ 570 $ 500,888 $ 26,965 $ 932,629 $ (449,919 ) $ 1,011,133
Net Income - - - - 42,360 - 42,360
Other Comprehensive Income - - - (19,029 ) - - (19,029 )
Share-Based Compensation - - 744 - - - 744
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 130,609 - 397 - (1,588 ) 5,721 4,530
Common Stock Repurchased (467,403 ) - - - - (21,929 ) (21,929 )
Cash Dividends Paid ($0.45 per share)   -       -     -     -       (21,584 )     -       (21,584 )
Balance as of March 31, 2011   47,760,878     $ 570   $ 502,029   $ 7,936     $ 951,817     $ (466,127 )   $ 996,225  
 
 
Bank of Hawaii Corporation and Subsidiaries  
Average Balances and Interest Rates - Taxable Equivalent Basis   Table 7
    Three Months Ended   Three Months Ended   Three Months Ended
March 31, 2012 December 31, 2011 March 31, 2011

(dollars in millions)

 

Average Balance

 

Income/ Expense

 

Yield/ Rate

    Average Balance   Income/ Expense   Yield/ Rate     Average Balance   Income/ Expense   Yield/ Rate
Earning Assets          
Interest-Bearing Deposits $ 3.2 $ - 0.25 % $ 3.9 $ - 0.23 % $ 4.0 $ - (0.16 ) %
Funds Sold 262.4 0.1 0.19 239.0 0.1 0.20 457.2 0.3 0.22
Investment Securities
Available-for-Sale 3,451.6 19.7 2.28 3,763.7 19.9 2.12 5,646.9 38.0 2.70
Held-to-Maturity 3,737.3 26.4 2.83 3,259.8 23.6 2.90 901.0 7.6 3.39
Loans Held for Sale 12.0 0.1 4.22 14.7 0.2 4.73 8.5 0.1 5.65
Loans and Leases 1
Commercial and Industrial 805.9 8.1 4.03 798.3 8.0 3.99 775.8 7.9 4.11
Commercial Mortgage 941.6 10.5 4.50 929.0 10.9 4.66 851.2 10.3 4.93
Construction 103.5 1.4 5.34 85.7 1.1 4.84 80.6 1.0 5.05
Commercial Lease Financing 294.3 1.7 2.33 311.0 2.1 2.68 333.6 2.3 2.75
Residential Mortgage 2,264.4 27.7 4.90 2,163.1 27.3 5.05 2,100.6 28.6 5.44
Home Equity 778.9 8.6 4.43 778.1 9.0 4.57 796.0 9.6 4.91
Automobile 193.1 3.0 6.20 190.7 3.1 6.40 203.1 3.6 7.14
Other 2     181.6     3.7   8.08       164.5     3.2   7.76       170.9     3.2   7.53  
Total Loans and Leases     5,563.3     64.7   4.66       5,420.4     64.7   4.75       5,311.8     66.5   5.04  
Other     79.9     0.3   1.40       79.9     0.3   1.40       79.9     0.3   1.40  
Total Earning Assets 3     13,109.7     111.3   3.40       12,781.4     108.8   3.40       12,409.3     112.8   3.65  
Cash and Noninterest-Bearing Deposits 137.2 142.2 134.5
Other Assets   434.3   434.0   421.8
Total Assets $ 13,681.2 $ 13,357.6 $ 12,965.6
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 1,867.1 0.1 0.02 $ 1,799.9 0.1 0.03 $ 1,805.0 0.2 0.04
Savings 4,439.0 1.3 0.12 4,447.8 1.4 0.13 4,536.9 2.2 0.20
Time     1,260.2     2.1   0.66       1,145.4     2.2   0.76       1,045.9     2.8   1.10  
Total Interest-Bearing Deposits     7,566.3     3.5   0.18       7,393.1     3.7   0.20       7,387.8     5.2   0.29  
Short-Term Borrowings 15.7 - 0.12 20.4 - 0.08 17.1 - 0.13
Securities Sold Under Agreements to Repurchase 1,916.0 7.3 1.51 1,848.9 7.4 1.57 1,761.2 7.1 1.60
Long-Term Debt     30.7     0.5   6.49       30.7     0.5   6.49       32.7     0.4   5.48  
Total Interest-Bearing Liabilities     9,528.7     11.3   0.47       9,293.1     11.6   0.49       9,198.8     12.7   0.56  
Net Interest Income $ 100.0 $ 97.2 $ 100.1
Interest Rate Spread 2.93 % 2.91 % 3.09 %
Net Interest Margin 3.06 % 3.04 % 3.24 %
Noninterest-Bearing Demand Deposits 2,864.0 2,767.3 2,485.8
Other Liabilities 267.8 275.2 262.2
Shareholders' Equity   1,020.7   1,022.0   1,018.8
Total Liabilities and Shareholders' Equity $ 13,681.2 $ 13,357.6 $ 12,965.6
 
1 Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.

3 Interest income includes taxable equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $2,070,000, $938,000, and $383,000 for the three months ended March 31, 2012, December 31, 2011, and March 31, 2011, respectively.

 
 
Bank of Hawaii Corporation and Subsidiaries  
Analysis of Change in Net Interest Income - Taxable Equivalent Basis   Table 8a  
  Three Months Ended March 31, 2012
Compared to December 31, 2011  
(dollars in millions)  

Volume 1

 

Rate 1

  Total  
Change in Interest Income:  
Investment Securities
Available-for-Sale $ (1.7 ) $ 1.5 $ (0.2 )
Held-to-Maturity 3.4 (0.6 ) 2.8
Loans Held for Sale (0.1 ) - (0.1 )
Loans and Leases
Commercial and Industrial - 0.1 0.1
Commercial Mortgage 0.1 (0.5 ) (0.4 )
Construction 0.2 0.1 0.3
Commercial Lease Financing (0.1 ) (0.3 ) (0.4 )
Residential Mortgage 1.2 (0.8 ) 0.4
Home Equity - (0.4 ) (0.4 )
Automobile - (0.1 ) (0.1 )
Other 2     0.4       0.1       0.5  
Total Loans and Leases     1.8       (1.8 )     -  
Total Change in Interest Income     3.4       (0.9 )     2.5  
 
Change in Interest Expense:
Interest-Bearing Deposits
Savings - (0.1 ) (0.1 )
Time     0.2       (0.3 )     (0.1 )
Total Interest-Bearing Deposits     0.2       (0.4 )     (0.2 )
Securities Sold Under Agreements to Repurchase     0.2       (0.3 )     (0.1 )
Total Change in Interest Expense     0.4       (0.7 )     (0.3 )
 
Change in Net Interest Income   $ 3.0     $ (0.2 )   $ 2.8  
 
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
 
Bank of Hawaii Corporation and Subsidiaries  
Analysis of Change in Net Interest Income - Taxable Equivalent Basis   Table 8b  
  Three Months Ended March 31, 2012
Compared to March 31, 2011  
(dollars in millions)   Volume 1   Rate 1   Total  
Change in Interest Income:  
Funds Sold $ (0.1 ) $ (0.1 ) $ (0.2 )
Investment Securities
Available-for-Sale (13.1 ) (5.2 ) (18.3 )
Held-to-Maturity 20.3 (1.5 ) 18.8
Loans and Leases
Commercial and Industrial 0.3 (0.1 ) 0.2
Commercial Mortgage 1.1 (0.9 ) 0.2
Construction 0.3 0.1 0.4
Commercial Lease Financing (0.3 ) (0.3 ) (0.6 )
Residential Mortgage 2.1 (3.0 ) (0.9 )
Home Equity (0.1 ) (0.9 ) (1.0 )
Automobile (0.2 ) (0.4 ) (0.6 )
Other 2     0.2       0.3       0.5  
Total Loans and Leases     3.4       (5.2 )     (1.8 )
Total Change in Interest Income     10.5       (12.0 )     (1.5 )
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - (0.1 ) (0.1 )
Savings - (0.9 ) (0.9 )
Time     0.5       (1.2 )     (0.7 )
Total Interest-Bearing Deposits     0.5       (2.2 )     (1.7 )
Securities Sold Under Agreements to Repurchase     0.6       (0.4 )     0.2  
Long-Term Debt     -       0.1       0.1  
Total Change in Interest Expense     1.1       (2.5 )     (1.4 )
 
Change in Net Interest Income   $ 9.4     $ (9.5 )   $ (0.1 )
 
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

2 Comprised of other consumer revolving credit, installment, and consumer lease financing.

 
 
Bank of Hawaii Corporation and Subsidiaries  
Salaries and Benefits   Table 9
  Three Months Ended
(dollars in thousands)  

March 31, 2012

 

December 31, 2011

 

March 31, 2011

Salaries $ 28,687   $ 28,330 $ 29,075
Incentive Compensation 4,054 3,881 3,466
Share-Based Compensation and Cash Grants for the Purchase of Company Stock 1,685 1,819 675
Commission Expense 1,536 1,701 1,663
Retirement and Other Benefits 4,390 4,429 4,962
Payroll Taxes 3,818 2,030 4,039
Medical, Dental, and Life Insurance 2,437 2,322 2,223
Separation Expense     417     415     679
Total Salaries and Benefits   $ 47,024   $ 44,927   $ 46,782
 
 
Bank of Hawaii Corporation and Subsidiaries  
Loan and Lease Portfolio Balances   Table 10
(dollars in thousands)   March 31, 2012   December 31, 2011   September 30, 2011   June 30, 2011   March 31, 2011
Commercial        
Commercial and Industrial $ 788,718 $ 817,170 $ 790,294 $ 815,912 $ 771,923
Commercial Mortgage 948,196 938,250 922,075 872,283 883,360
Construction 110,184 98,669 69,635 81,432 80,360
Lease Financing     285,860     311,928     312,159     316,776     331,491
Total Commercial     2,132,958     2,166,017     2,094,163     2,086,403     2,067,134
Consumer
Residential Mortgage 2,319,485 2,215,892 2,130,589 2,130,335 2,108,376
Home Equity 773,643 780,691 775,105 783,582 787,179
Automobile 193,851 192,506 191,497 191,739 196,649
Other 1     178,995     183,198     157,118     159,414     167,591
Total Consumer     3,465,974     3,372,287     3,254,309     3,265,070     3,259,795
Total Loans and Leases   $ 5,598,932   $ 5,538,304   $ 5,348,472   $ 5,351,473   $ 5,326,929
 
 
Higher Risk Loans Outstanding                    
(dollars in thousands)   March 31, 2012   December 31, 2011   September 30, 2011   June 30, 2011   March 31, 2011
Residential Home Building 2 $ 13,148 $ 13,475 $ 15,379 $ 16,186 $ 14,744
Residential Land Loans 3 17,602 18,163 18,305 19,960 21,595
Home Equity Loans 4 21,359 21,413 22,321 21,778 23,783
Air Transportation 5     27,548     36,144     36,511     36,961     37,440
Total Higher Risk Loans   $ 79,657   $ 89,195   $ 92,516   $ 94,885   $ 97,562
 
1 Comprised of other revolving credit, installment, and lease financing.

2 Residential home building loans were $54.4 million as of March 31, 2012. Higher risk loans within this segment are defined as those loans with a well-defined weakness or weaknesses that jeopardizes the orderly repayment of the loan.

3 We consider all of our residential land loans, which are consumer loans secured by unimproved lots, to be of higher risk due to the volatility in the value of the underlying collateral.
4 Higher risk home equity loans are defined as those loans originated in 2005 or later, with current monitoring credit scores below 600, and with original loan-to-value ratios greater than 70%.
5 We consider all of our air transportation leases to be of higher risk due to the weak financial profile of the industry.
 
 
Deposits                    
(dollars in thousands)  

March 31, 2012

 

December 31, 2011

 

September 30, 2011

 

June 30, 2011

 

March 31, 2011

Consumer $ 5,377,804 $ 5,241,827 $ 5,137,548 $ 5,073,101 $ 5,097,056
Commercial 4,307,931 4,320,712 4,275,915 4,165,435 4,326,495
Public and Other     935,435     1,030,084     595,550     740,498     488,840
Total Deposits   $ 10,621,170   $ 10,592,623   $ 10,009,013   $ 9,979,034   $ 9,912,391
 
 
Bank of Hawaii Corporation and Subsidiaries  
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More   Table 11
(dollars in thousands)   March 31, 2012   December 31, 2011   September 30, 2011   June 30, 2011   March 31, 2011
Non-Performing Assets 1        
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 5,852 $ 6,243 $ 6,593 $ 1,839 $ 1,107
Commercial Mortgage 2,113 2,140 2,188 3,290 3,421
Construction 1,482 2,080 - 288 288
Lease Financing     4       5       6       8       9  
Total Commercial     9,451       10,468       8,787       5,425       4,825  
Consumer
Residential Mortgage 26,356 25,256 23,779 23,970 24,372
Home Equity 2,069 2,024 1,863 2,155 2,602
Other 2     -       -       -       16       -  
Total Consumer     28,425       27,280       25,642       26,141       26,974  
Total Non-Accrual Loans and Leases     37,876       37,748       34,429       31,566       31,799  
Foreclosed Real Estate     3,530       3,042       3,341       2,590       2,793  
Total Non-Performing Assets   $ 41,406     $ 40,790     $ 37,770     $ 34,156     $ 34,592  
   
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial   $ 2     $ 1     $ -     $ -     $ -  
Total Commercial     2       1       -       -       -  
Consumer
Residential Mortgage 6,590 6,422 7,664 5,854 3,614
Home Equity 2,829 2,194 2,639 1,147 1,100
Automobile 124 170 138 167 260
Other 2     543       435       414       604       578  
Total Consumer     10,086       9,221       10,855       7,772       5,552  
Total Accruing Loans and Leases Past Due 90 Days or More   $ 10,088     $ 9,222     $ 10,855     $ 7,772     $ 5,552  

Restructured Loans on Accrual Status and Not Past Due 90 Days or More

  $ 29,539     $ 33,703     $ 33,140     $ 28,193     $ 29,513  
Total Loans and Leases   $ 5,598,932     $ 5,538,304     $ 5,348,472     $ 5,351,473     $ 5,326,929  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases     0.68 %     0.68 %     0.64 %     0.59 %     0.60 %
 

Ratio of Non-Performing Assets to Total Loans and Leases, Loans Held for Sale, and Foreclosed Real Estate

    0.74 %     0.73 %     0.70 %     0.64 %     0.65 %
 

Ratio of Commercial Non-Performing Assets to Total Commercial Loans and Leases, Commercial Loans Held for Sale, and Commercial Foreclosed Real Estate

    0.53 %     0.56 %     0.52 %     0.34 %     0.31 %
 

Ratio of Consumer Non-Performing Assets to Total Consumer Loans and Leases and Consumer Foreclosed Real Estate

    0.87 %     0.85 %     0.82 %     0.83 %     0.86 %
 

Ratio of Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More to Total Loans and Leases, Loans Held for Sale, and Foreclosed Real Estate

    0.92 %     0.90 %     0.91 %     0.78 %     0.75 %
 
Quarter to Quarter Changes in Non-Performing Assets 1
Balance at Beginning of Quarter $ 40,790 $ 37,770 $ 34,156 $ 34,592 $ 37,786
Additions 5,334 8,653 8,552 6,079 5,591
Reductions
Payments (2,524 ) (1,173 ) (3,237 ) (2,363 ) (2,164 )
Return to Accrual Status (535 ) (2,421 ) (401 ) (3,226 ) (6,408 )
Sales of Foreclosed Real Estate (1,049 ) (1,320 ) (157 ) (497 ) -
Charge-offs/Write-downs     (610 )     (719 )     (1,143 )     (429 )     (213 )
Total Reductions     (4,718 )     (5,633 )     (4,938 )     (6,515 )     (8,785 )
Balance at End of Quarter   $ 41,406     $ 40,790     $ 37,770     $ 34,156     $ 34,592  
 

1 Excluded from non-performing assets was a contractually binding non-accrual loan held for sale of $7.5 million as of March 31, 2011.

2 Comprised of other revolving credit, installment, and lease financing.
 
 
Bank of Hawaii Corporation and Subsidiaries  
Reserve for Credit Losses   Table 12
      Three Months Ended
(dollars in thousands)   March 31, 2012   December 31, 2011   March 31, 2011
Balance at Beginning of Period $ 144,025   $ 148,829 $ 152,777
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (1,431 ) (733 ) (1,657 )
Construction (330 ) - -
Consumer
Residential Mortgage (1,580 ) (2,888 ) (1,751 )
Home Equity (2,441 ) (3,714 ) (1,359 )
Automobile (526 ) (688 ) (1,029 )
Other 1     (1,451 )     (1,585 )     (1,564 )
Total Loans and Leases Charged-Off     (7,759 )     (9,608 )     (7,360 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 1,933 469 572
Commercial Mortgage 24 8 -
Lease Financing 72 29 50
Consumer
Residential Mortgage 666 531 259
Home Equity 570 469 339
Automobile 538 528 649
Other 1     605       551       800  
Total Recoveries on Loans and Leases Previously Charged-Off     4,408       2,585       2,669  
Net Loans and Leases Charged-Off (3,351 ) (7,023 ) (4,691 )
Provision for Credit Losses     351       2,219       4,691  
Balance at End of Period 2   $ 141,025     $ 144,025     $ 152,777  
 
Components
Allowance for Loan and Lease Losses $ 135,606 $ 138,606 $ 147,358
Reserve for Unfunded Commitments     5,419       5,419       5,419  
Total Reserve for Credit Losses   $ 141,025     $ 144,025     $ 152,777  
 
Average Loans and Leases Outstanding   $ 5,563,358     $ 5,420,352     $ 5,311,781  
 

Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding (annualized)

0.24 % 0.51 % 0.36 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 2.42 % 2.50 % 2.77 %
 
1 Comprised of other revolving credit, installment, and lease financing.

2 Included in this analysis is activity related to the Company's reserve for unfunded commitments, which is separately recorded in other liabilities in the Consolidated Statements of Condition.

 
 
Bank of Hawaii Corporation and Subsidiaries  
Business Segments Selected Financial Information   Table 13
(dollars in thousands)  

Retail Banking

 

Commercial Banking

 

Investment Services

 

Treasury and Other

 

Consolidated Total

Three Months Ended March 31, 2012        
Net Interest Income $ 39,970 $ 31,442 $ 3,546 $ 22,990 $ 97,948
Provision for Credit Losses     4,030       (668 )     (12 )     (2,999 )     351  
Net Interest Income After Provision for Credit Losses 35,940 32,110 3,558 25,989 97,597
Noninterest Income 19,136 11,577 14,074 3,295 48,082
Noninterest Expense     (44,507 )     (23,530 )     (15,131 )     (2,039 )     (85,207 )
Income Before Provision for Income Taxes 10,569 20,157 2,501 27,245 60,472
Provision for Income Taxes     (3,910 )     (3,017 )     (926 )     (8,809 )     (16,662 )
Net Income     6,659       17,140       1,575       18,436       43,810  
Total Assets as of March 31, 2012   $ 3,198,548     $ 2,294,278     $ 252,915     $ 8,013,668     $ 13,759,409  
 
 
Three Months Ended March 31, 2011 1
Net Interest Income $ 44,424 $ 35,004 $ 3,863 $ 16,406 $ 99,697
Provision for Credit Losses     5,043       (188 )     (140 )     (24 )     4,691  
Net Interest Income After Provision for Credit Losses 39,381 35,192 4,003 16,430 95,006
Noninterest Income 20,120 9,058 15,051 9,693 53,922
Noninterest Expense     (43,818 )     (24,503 )     (15,403 )     (2,358 )     (86,082 )
Income Before Provision for Income Taxes 15,683 19,747 3,651 23,765 62,846
Provision for Income Taxes     (5,803 )     (6,802 )     (1,351 )     (6,530 )     (20,486 )
Net Income     9,880       12,945       2,300       17,235       42,360  
Total Assets as of March 31, 2011   $ 3,046,673     $ 2,264,528     $ 234,847     $ 7,416,256     $ 12,962,304  
 
1 Certain prior period information has been reclassified to conform to current presentation.
 
 
Bank of Hawaii Corporation and Subsidiaries  
Selected Quarterly Financial Data     Table 14
  Three Months Ended
(dollars in thousands, except per share amounts)   March 31, 2012     December 31, 2011     September 30, 2011     June 30, 2011     March 31, 2011
Quarterly Operating Results        
Interest Income
Interest and Fees on Loans and Leases $ 64,691 $ 64,760 $ 65,344 $ 65,542 $ 66,593
Income on Investment Securities
Available-for-Sale 17,713 19,107 23,097 23,490 37,669
Held-to-Maturity 26,413 23,608 20,344 20,553 7,633
Deposits 2 2 6 2 (2 )
Funds Sold 129 120 160 297 251
Other     280         280       279       279       279  
Total Interest Income     109,228         107,877       109,230       110,163       112,423  
Interest Expense
Deposits 3,473 3,736 4,561 4,792 5,232
Securities Sold Under Agreements to Repurchase 7,304 7,392 7,400 7,338 7,041
Funds Purchased 5 5 4 5 6
Long-Term Debt     498         498       499       529       447  
Total Interest Expense     11,280         11,631       12,464       12,664       12,726  
Net Interest Income 97,948 96,246 96,766 97,499 99,697
Provision for Credit Losses     351         2,219       2,180       3,600       4,691  
Net Interest Income After Provision for Credit Losses     97,597         94,027       94,586       93,899       95,006  
Noninterest Income
Trust and Asset Management 10,918 11,025 10,788 11,427 11,806
Mortgage Banking 5,050 3,401 5,480 2,661 3,122
Service Charges on Deposit Accounts 9,591 9,606 9,820 9,375 9,932
Fees, Exchange, and Other Service Charges 12,399 12,401 16,219 16,662 14,945
Investment Securities Gains (Losses), Net (90 ) 282 - - 6,084
Insurance 2,278 2,312 2,664 3,210 2,771
Other     7,936         4,380       5,892       6,128       5,262  
Total Noninterest Income     48,082         43,407       50,863       49,463       53,922  
Noninterest Expense
Salaries and Benefits 47,024 44,927 44,307 46,800 46,782
Net Occupancy 10,516 11,253 11,113 10,476 10,327
Net Equipment 5,826 4,748 4,662 4,741 4,698
Professional Fees 2,132 1,926 2,245 2,294 2,158
FDIC Insurance 2,071 2,027 2,065 2,010 3,244
Other     17,638         19,501       19,563       27,453       18,873  
Total Noninterest Expense     85,207         84,382       83,955       93,774       86,082  
Income Before Provision for Income Taxes 60,472 53,052 61,494 49,588 62,846
Provision for Income Taxes     16,662         13,823       18,188       14,440       20,486  
Net Income   $ 43,810       $ 39,229     $ 43,306     $ 35,148     $ 42,360  
 
Basic Earnings Per Share

$0.96

$0.85 $0.93 $0.74 $0.89
Diluted Earnings Per Share $0.95 $0.85 $0.92 $0.74 $0.88
 
Balance Sheet Totals
Loans and Leases $ 5,598,932 $ 5,538,304 $ 5,348,472 $ 5,351,473 $ 5,326,929
Total Assets 13,759,409 13,846,391 13,304,758 13,161,204 12,962,304
Total Deposits 10,621,170 10,592,623 10,009,013 9,979,034 9,912,391
Total Shareholders' Equity 995,897 1,002,667 1,017,775 1,003,450 996,225
 
Performance Ratios
Return on Average Assets 1.29

%

 

1.17 % 1.31 % 1.09 % 1.32

%

 

Return on Average Shareholders' Equity 17.26 15.23 16.80 13.86 16.86
Efficiency Ratio 1 58.35 60.42 56.87 63.81 56.04
Net Interest Margin 2 3.06 3.04 3.09 3.16 3.24
 
1 The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
2 The net interest margin is defined as net interest income, on a fully-taxable equivalent basis, as a percentage of average earning assets.
 
 
Bank of Hawaii Corporation and Subsidiaries  
Hawaii Economic Trends   Table 15
  Two Months Ended   Year Ended
($ in millions; jobs in thousands)   February 29, 2012   December 31, 2011   December 31, 2010
Hawaii Economic Trends      
State General Fund Revenues 1 $ 846.2 19.4 % $ 4,662.5 8.1

%

 

$ 4,314.1 7.4

%

 

General Excise and Use Tax Revenue 1 $ 493.2 17.6 $ 2,588.5 8.8 $ 2,379.9 3.6
Jobs 2 592.5 0.8 592.1 0.9 586.8 (0.8 )
                                   
March 31, December 31,
(spot rates)             2012   2011   2010   2009
Unemployment 3
Statewide, seasonally adjusted 6.4

%

 

6.2

%

 

6.3 % 6.9

%

 

 
Oahu 5.7 5.4 4.8 5.4
Island of Hawaii 9.2 8.9 8.6 9.5
Maui 7.1 7.1 7.4 8.8
Kauai 8.1 7.8 7.8 8.7
                                   
March 31, December 31,
(percentage change, except months of inventory)             2012   2011   2010   2009
Housing Trends (Single Family Oahu) 4
Median Home Price 10.4

%

 

(3.0)

%

 

3.1 %

(7.3)

%

 

Home Sales Volume (units)

(1.3)

%

 

(2.7)

%

 

13.4 %

(1.8)

%

 

Months of Inventory 4.0 4.8 6.0 6.8
                                   
(in thousands)            

Monthly Visitor Arrivals, Seasonally Adjusted

 

Percentage Change from Previous Month

Tourism 2
 
January 31, 2012 649.2 3.0

%

 

December 31, 2011 630.4 2.7
November 30, 2011 613.8 1.7
October 31, 2011 603.4 (1.2 )
September 30, 2011 610.6 3.8
August 31, 2011 588.4 0.9
July 31, 2011 582.9 1.2
June 30, 2011 575.9 (0.1 )
May 31, 2011 576.6 (0.8 )
April 30, 2011 581.5 (0.9 )
March 31, 2011 586.9 (2.8 )
February 28, 2011 603.8 (0.3 )
January 31, 2011 605.4 2.2
December 31, 2010 592.6 (0.0 )
November 30, 2010 592.9 (1.5 )
October 31, 2010 601.7 2.5
September 30, 2010 587.3 1.0
August 31, 2010 581.7 (2.5 )
July 31, 2010 596.6 3.7
June 30, 2010 575.0 0.2
May 31, 2010 573.9 0.9
April 30, 2010 568.9 1.9
March 31, 2010 558.1 2.7
February 28, 2010 543.5 (0.3 )
January 31, 2010 544.9 1.0
 
1 Source: Hawaii Department of Business, Economic Development & Tourism.
2 Source: University of Hawaii Economic Research Organization. Year-to-date figures.
3 Source: University of Hawaii Economic Research Organization, State of Hawaii Department of Labor and Industrial Relations.
4 Source: Honolulu Board of REALTORS.
Note: Certain prior period seasonally adjusted information has been revised.




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